EXHIBIT 4.3
GASCO ENERGY, INC.
SUBSCRIPTION AND REGISTRATION RIGHTS AGREEMENT
This Subscription and Registration Rights Agreement (this "Agreement"),
made as of the date set forth below by and between Gasco Energy, Inc. (the
"Company") and the undersigned ("Subscriber"), is intended to set forth certain
representations, covenants and agreements between the Company and the
Subscriber, with respect to the offering (the "Offering") for sale by the
Company of shares of Series B Preferred Stock, par value $.001 per share (the
"Preferred Stock"), as described in the Company's Private Placement Memorandum
dated February 5, 2003 (the "Memorandum"), a copy of which has been delivered to
Subscriber.
1. Subscription. Subject to the terms and conditions hereof, the
Subscriber hereby irrevocably subscribes for and agrees to purchase
from the Company the number of shares of Preferred Stock (the "Shares")
set forth under the Subscriber's name on the signature page hereto at a
purchase price of $440.00 per share (the "Offering Price"), and the
Company agrees to sell such Shares to the Subscriber at the Offering
Price, subject to the Company's right to sell to the Subscriber such
lesser number of Shares as the Company may, in its sole discretion,
deem necessary or desirable.
2. Delivery of Subscription Amount; Acceptance of Subscription; Delivery
of Shares. Subscriber understands and agrees that this subscription is
made subject to the following terms and conditions:
(a) Subscriber understands that separate subscription agreements will be
executed with other Subscribers for the remainder of the Shares to be
sold in the Offering;
(b) Contemporaneously with the execution and delivery of this Agreement,
Subscriber shall execute and deliver the Certificate of Accredited
Investor Status, and shall wire to the Company to hold in a separate,
non-interest bearing account, immediately available funds in the amount
equal to the Offering Price multiplied by the number of Shares for
which the Subscriber has subscribed (the "Subscription Amount") in
accordance with the instructions set forth on Exhibit A hereto.
(c) The subscription for Shares shall be deemed to be accepted only when
this Agreement has been signed by an authorized officer of the Company,
and the deposit of the Subscription Amount for clearance will not be
deemed an acceptance of this Agreement;
(d) The Company shall have the right to reject this subscription, in whole
or in part and shall have the right to allocate Shares among
Subscribers in any manner it may desire;
(e) The payment of the Subscription Amount (or, in the case of rejection of
a portion of the Subscriber's subscription, the part of the payment
relating to such rejected portion) will be returned promptly, without
interest, if Subscriber's subscription is rejected in whole or in part
or if the Offering is withdrawn or canceled;
1
(f) Certificates representing the Shares purchased will be issued in the
name of each Subscriber within 5 days of the consummation of the
Offering as set forth under Section 3 hereof; and
(g) The representations and warranties of the Company and Subscriber set
forth herein shall be true and correct as of the date that the Company
accepts this subscription.
3. Terms of Subscription.
(a) The subscription period will begin as of February 5, 2003 and will
terminate at 11:59 p.m. Eastern time on February 10, 2003, unless
extended by the Company, on one or more occasions, for up to an
additional sixty (60) days (the "Termination Date"). Such extension may
be effected without notice to the Subscribers.
(b) If the Subscriber is not a United States person, the Subscriber hereby
represents that it has satisfied itself as to the full observance of
the laws of its jurisdiction in connection with any invitation to
subscribe for the Shares or any use of this Agreement, including (i)
the legal requirements within its jurisdiction for the purchase of the
Shares, (ii) any foreign exchange restrictions applicable to such
purchase, (iii) any governmental or other consents that may need to be
obtained, and (iv) the income tax and other tax consequences, if any,
that may be relevant to the purchase, holding, redemption, sale or
transfer of the Shares. The Subscriber's subscription and payment for,
and his or her continued beneficial ownership of the Shares, will not
violate any applicable securities or other laws of the Subscriber's
jurisdiction.
4. Registration Rights.
(a) Subscriber acknowledges that it is acquiring the Shares for its own
account and for the purpose of investment and not with a view to any
distribution or resale thereof within the meaning of the Securities Act
of 1933, as amended, (the "Securities Act"). The Subscriber further
agrees that it will not sell, assign or transfer the Shares, or shares
of common stock of the Company, par value $.0001 ("Common Stock"), into
which the Shares are convertible (the "Underlying Common Shares"), at
any time in violation of the Securities Act and acknowledges that, in
taking unregistered securities, it must continue to bear the economic
risk of its investment for an indefinite period of time because of the
fact that the Shares and the Underlying Common Shares have not been
registered under the Securities Act, and further realizes that neither
the Shares nor the Underlying Common Shares can be sold unless
subsequently registered under the Securities Act or an exemption from
such registration is available. The Subscriber further recognizes that
the Company is not assuming any obligation to register the Shares or
the Underlying Common Shares except as expressly set forth herein. The
Subscriber also acknowledges that appropriate legends reflecting the
status of the Shares and the Underlying Common Shares under the
Securities Act may be placed on the face of the certificates for such
shares at the time of their transfer and delivery to the holder
thereof.
(b) Neither the Shares nor the Underlying Common Shares may be transferred
except in a transaction which is in compliance with the Securities Act.
Except as provided hereafter with respect to registration of the Shares
or the Underlying Common Shares, it shall be a condition to any such
transfer that the Company shall be furnished with an opinion of counsel
2
to the holder of such shares, reasonably satisfactory to the Company,
to the effect that the proposed transfer would be in compliance with
the Securities Act.
(c) Within 30 days after the filing of the Company's annual report on Form
10-K for the fiscal year ended December 31, 2002 (the "Filing Date"),
the Company shall use its commercially reasonable efforts to prepare
and file with the Securities and Exchange Commission (the "SEC"), a
registration statement and such other documents as may be necessary in
the opinion of counsel for the Company, and use its commercially
reasonable efforts to have such registration statement declared
effective within 75 days after the Filing Date in order to comply with
the provisions of the Securities Act so as to permit the registered
resale of the Underlying Common Shares for a period of two (2) years
following the Closing Date by each and every holder of Shares sold in
the Offering, except for those holders who designate on the signature
page hereto that they do not wish to have their Underlying Common
Shares included in the registration statement. The Underlying Common
Shares that are registered for resale under such registration statement
are referred to herein as the "Offering Shares," and the Subscribers
who are eligible to sell their Underlying Common Shares under such
registration statement, together with their affiliates, are hereafter
referred to as "Offering Holders." The Company will include in such
registration statement (i) the information required under the
Securities Act to be so included concerning the Offering Holders, as
provided by the Offering Holders on the signature page hereto,
including any changes in such information that may be provided by the
Offering Holders in writing to the Company from time to time, and (ii)
a section entitled "Plan of Distribution," substantially in the form of
Exhibit C hereto, that describes the various procedures that may be
used by the Offering Holders in the sale of Underlying Common Shares.
Notwithstanding anything to the contrary in this Section 4, the Company
may, at its option, terminate such registration statement at any time
after a period of one year following the Closing Date, if at such time
no Offering Holder beneficially owns more than 1,000,000 of the
Underlying Common Shares underlying the Shares that such Offering
Holder purchased in the Offering.
(d) If the registration statement referred to in Section 4(c) above has not
been declared effective by the SEC within 75 days after the Filing Date
and the cause of the delay is not related to circumstances beyond the
Company's control (such as failure of the SEC to review and act on the
registration statement or amendments to the registration statement in a
timely manner), the Company shall pay liquidated damages of 2% of the
Offering Price per share for every Share for each 30 day period of
delay following such initial 75 day period ("Liquidated Damages"). The
foregoing payment shall constitute the sole monetary remedy available
to the Subscriber in the event that the Company does not comply with
the deadlines set forth in Section 4(c) with respect to the filing and
effectiveness of the registration statement referred to therein.
(e) Notwithstanding the foregoing provisions of this Section 4, the Company
may voluntarily suspend the effectiveness of any such registration
statement for a limited time, which in no event shall be longer than 60
days in any three-month period and no longer than 120 days in any
twelve month period, if the Company has been advised in writing by
counsel or underwriters to the Company that the offering of any
Offering Shares pursuant to the registration statement would materially
adversely affect, or would be improper in view of (or improper without
disclosure in a prospectus), a proposed financing, a reorganization,
3
recapitalization, merger, consolidation, or similar transaction
involving the Company. If the effectiveness of any such registration
statement is suspended for a period of time in violation of the
preceding sentence and the cause of the delay is not related to
circumstances beyond the Company's control (such as the failure of the
SEC to review and act on a post-effective amendment to the registration
statement in a timely manner), the Company shall pay Liquidated Damages
for each such violation, subject to the limitation set forth in the
last sentence of Section 4(d). If any event occurs that would cause any
such registration statement to contain a material misstatement or
omission or not to be effective and usable during the period that such
registration statement is required to be effective and usable, the
Company shall promptly file an amendment to the registration statement
and use its commercially reasonable efforts to cause such amendment to
be declared effective as soon as practicable thereafter.
Notwithstanding any provision contained herein to the contrary, the
Company's obligation to include, or continue to include, Offering
Shares in any such registration statement under this Section 4 shall
terminate to the extent such shares are eligible for resale under Rule
144(k) promulgated under the Securities Act.
(f) If and whenever the Company is required by the provisions of this
Agreement to use its commercially reasonable efforts to effect the
registration of the Offering Shares under the Securities Act for the
account of an Offering Holder, the Company will, as promptly as
possible:
(i) prepare and file with the SEC a registration statement with respect to
such securities and use its commercially reasonable efforts to cause
such registration statement to become and remain effective;
(ii) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective and
to comply with the requirements of the Securities Act and the rules and
regulations promulgated by the SEC thereunder relating to the sale or
other disposition of the securities covered by such registration
statement;
(iii) furnish to each Offering Holder such numbers of copies of a prospectus,
including a preliminary prospectus, complying with the requirements of
the Securities Act, and such other documents as such Offering Holder
may reasonably request in order to facilitate the public sale or other
disposition of the Offering Shares owned by such Offering Holder, but
such Offering Holder shall not be entitled to use any selling materials
other than a prospectus and such other materials as may be approved by
the Company, which approval will not be unreasonably withheld; and
(g) Except as provided below in this Section 4, the expenses incurred by
the Company in connection with action taken by the Company to comply
with this Section 4, including, without limitation, all registration
and filing fees, printing and delivery expenses, accounting fees, fees
and disbursements of counsel to the Company, consultant and expert
fees, premiums for liability insurance, if the Company chooses to
obtain such insurance, obtained in connection with a registration
statement filed to effect such compliance and all expenses, including
counsel fees, of complying with any state securities laws ("State
Acts"), shall be paid by the Company. All fees and disbursements of any
counsel, experts, or consultants employed by any Offering Holder shall
4
be borne by such Offering Holder. The Company shall not be obligated in
any way in connection with any registration pursuant to this Section 4
for any selling commissions or discounts payable by any Offering Holder
to any underwriter or broker of securities to be sold by such Offering
Holder. Subscriber agrees to pay all expenses required to be borne by
such Offering Holder.
(h) In the event of any registration of Underlying Common Shares pursuant
to this Section 4, the Company will indemnify and hold harmless each
Offering Holder, its officers, directors, investment advisors and each
underwriter of such securities, and any person who controls such
Offering Holder or underwriter within the meaning of Section 15 of the
Securities Act, against all claims, actions, losses, damages,
liabilities and expenses, joint or several, to which any of such
persons may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities or actions arise
out of or are based upon any untrue statement of any material fact
contained in any registration statement under which such securities
were registered under the Securities Act, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse such
Offering Holder, its officers, directors and each underwriter of such
securities, and each such controlling person or entity for any legal
and any other expenses reasonably incurred by such Offering Holder,
such underwriter, or such controlling person or entity in connection
with investigating or defending any such loss, action, claim, damage,
liability, or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim,
damage, liability or action arises directly out of or is based
primarily upon an untrue statement or omission made in said
registration statement, said preliminary prospectus or said prospectus,
or said amendment of supplement in reliance upon and in conformity with
written information furnished to the Company by such Offering Holder or
such underwriter specifically for use in the preparation thereof, and
provided further however, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage or liability
or action arises directly out of or is based primarily upon an untrue
statement or omission made in any preliminary prospectus or final
prospectus if (i) such Offering Holder failed to send or deliver a copy
of the final prospectus or prospectus supplement with or prior to the
delivery of written confirmation of the sale of the Offering Shares,
and (ii) the final prospectus or prospectus supplement would have
corrected such untrue statement or omission.
(i) At any time when a prospectus relating to the Offering is required to
be delivered under the Securities Act, the Company will notify the
Offering Holder of the happening of any event, upon the notification or
awareness of such event by an executive officer of the Company, as a
result of which the prospectus included in such registration statement,
as then in effect, includes an untrue statement of material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing.
(j) In the event of any registration of any Underlying Common Shares under
the Securities Act pursuant to this Section 4, Subscriber agrees to
indemnify and hold harmless the Company, its officers, directors and
any person who controls the Company within the meaning of Section 15 of
the Securities Act, against any losses, claims, damages, liabilities,
or actions, joint or several, to which the Company, its officers,
directors, or such controlling person or entity may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
5
damages, liabilities, or actions arise out of or are based upon any
untrue statement of any material fact contained in any registration
statement under which such Underlying Common Shares were registered
under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto,
or arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent and only
to the extent that any such loss, claim, damage, liability, or action
arises out of or is based upon an untrue statement or omission made in
said registration statement, said preliminary prospectus or said
prospectus or said amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by
Subscriber or any affiliate (as defined in the Securities Act) of
Subscriber specifically for use in the preparation thereof.
(k) Any party entitled to indemnification hereunder will (i) give prompt
written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such
claim, permit such indemnifying party to assume the defense of such
claim with counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party will not be subject to
any liability for any settlement made by the indemnified party without
its consent (which consent may not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the
defense of a claim will not be obligated to pay the fees and expenses
of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified
parties with respect to such claim.
(l) With a view to making available to the Offering Holder the benefits of
Rule 144 promulgated under the Securities Act, the Company agrees that
it will use its commercially reasonable efforts to maintain
registration of its Common Stock under Section 12 or 15 of the
Securities and Exchange Act of 1934, as amended, (the "Exchange Act")
and to file with the SEC in a timely manner all reports and other
documents required to be filed by an issuer of securities registered
under the Exchange Act so as to maintain the availability of Rule 144.
Upon the request of any record owner, the Company will deliver to such
owner a written statement as to whether it has complied with the
reporting requirements of Rule 144.
5. Representations and Warranties of the Subscriber. Subscriber hereby
represents and warrants to the Company as follows:
(a) Subscriber is acquiring the Shares for its own account, for investment
and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the
Securities Act, and applicable state securities laws.
(b) The Subscriber understands that (A) the Shares (1) have not been
registered under the Securities Act or any state securities laws, (2)
will be issued in reliance upon an exemption from the registration and
prospectus delivery requirements of the Securities Act pursuant to
Section 4(2) and/or Regulation D thereof and (3) will be issued in
reliance upon exemptions from the registration and prospectus delivery
requirements of state securities laws which relate to private
6
offerings, and (B) the Subscriber must therefore bear the economic risk
of such investment indefinitely unless a subsequent disposition thereof
is registered under the Securities Act and applicable state securities
laws or is exempt therefrom. Subscriber further understands that such
exemptions depend upon, among other things, the bona fide nature of the
investment intent of the Subscriber expressed herein. Pursuant to the
foregoing, the Subscriber acknowledges that the certificates
representing the Shares, and any Underlying Common Shares, acquired by
the Subscriber shall bear a restrictive legend substantially as
follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND STATE SECURITIES LAWS, AND MAY NOT BE OFFERED FOR
SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED
OF UNLESS (I) REGISTERED UNDER THE APPLICABLE SECURITIES LAWS OR
(II) AN OPINION OF COUNSEL, WHICH OPINION AND COUNSEL ARE BOTH
REASONABLY SATISFACTORY TO THE COMPANY, HAS BEEN DELIVERED TO THE
COMPANY AND SUCH OPINION STATES THAT THE SHARES MAY BE
TRANSFERRED WITHOUT SUCH REGISTRATION."
(c) The Subscriber has knowledge, skill and experience in financial,
business and investment matters relating to an investment of this type
and is capable of evaluating the merits and risks of such investment
and protecting the Subscriber's interest in connection with the
acquisition of the Shares. The Subscriber understands that the
acquisition of the Shares is a speculative investment and involves
substantial risks and that the Subscriber could lose the Subscriber's
entire investment in the Shares. To the extent deemed necessary by the
Subscriber, the Subscriber has retained, at its own expense, and relied
upon, appropriate professional advice regarding the investment, tax and
legal merits and consequences of purchasing and owning the Shares. The
Subscriber has the ability to bear the economic risks of the
Subscriber's investment in the Company, including a complete loss of
the investment, and the Subscriber has no need for liquidity in such
investment.
(d) The Subscriber has been furnished by the Company all information (or
provided access to all information) regarding the business and
financial condition of the Company, its expected plans for future
business activities, the attributes of the Shares and the merits and
risks of an investment in the Shares which the Subscriber has requested
or otherwise need to evaluate the investment in the Company.
(e) Subscriber is in receipt of and has carefully read and understands the
following items:
(i) the Memorandum; and
(ii) Final Prospectus to Post-Effective Amendment No. 1 to Form S-1, filed
December 20, 2002.
7
(f) In making the proposed investment decision, the Subscriber is relying
solely on investigations made by the Subscriber and the Subscriber's
representatives. The offer to sell the Shares was communicated to the
Subscriber in such a manner that the Subscriber was able to ask
questions of and receive answers from the management of the Company
concerning the terms and conditions of the proposed transaction and
that at no time was the Subscriber presented with or solicited by or
through any leaflet, public promotional meeting, television
advertisement or any other form of general or public advertising or
solicitation.
(g) The Subscriber acknowledges that the Subscriber has been advised that:
(i) The Shares offered hereby and the Underlying Common Shares have not
been approved or disapproved by the SEC or any state securities
commission nor has the SEC or any state securities commission passed
upon the accuracy or adequacy of any representations by the Company.
Any representation to the contrary is a criminal offense.
(ii) In making an investment decision, the Subscriber must rely on its own
examination of the Company and the terms of the Offering, including the
merits and risks involved. Neither the Shares nor the Underlying Common
Shares have been recommended by any federal or state securities
commission or regulatory authority. Furthermore, the foregoing
authorities have not confirmed the accuracy or determined the adequacy
of any representation. Any representation to the contrary is a criminal
offense.
(iii) The Shares and the Underlying Common Shares are "Restricted Securities"
within the meaning of Rule 144 under the Securities Act, are subject to
restrictions on transferability and resale and may not be transferred
or resold except as permitted under the Securities Act and applicable
state securities laws, pursuant to registration or exemption therefrom.
The Subscriber is aware that the Subscriber may be required to bear the
financial risks of this investment for an indefinite period of time.
(h) The Subscriber acknowledges and is aware that there has never been any
representation, guarantee or warranty made by the Company or any
officer, director, employee or agent or representative of the Company,
expressly or by implication, as to (i) the approximate or exact length
of time that the Subscriber will be required to remain an owner of the
Shares or the Underlying Common Shares; (ii) the percentage of profit
and/or amount of or type of consideration, profit or loss to be
realized, if any, as a result of this investment; or (iii) that the
limited past performance (if any) or experience on the part of the
Company, or any future expectations will in any way indicate the
predictable results of the ownership of the Shares or the Underlying
Common Shares or of the overall financial performance of the Company.
(i) The Subscriber agrees to furnish the Company such other information as
the Company may reasonably request in order to verify the accuracy of
the information contained herein and agrees to notify the Company
immediately of any material change in the information provided herein
that occurs prior to the Company's acceptance of this Agreement.
(j) The Subscriber further represents and warrants that the Subscriber is
an "accredited investor" within the meaning of Rule 501 of Regulation D
under the Securities Act, and Subscriber has executed the Certificate
8
of Accredited Investor Status, attached hereto as Exhibit B.
(k) As of the date of this Agreement the Subscriber and its affiliates do
not have, and during the 30 day period prior to the date of this
Agreement the Subscriber and its affiliates have not entered into, any
"put equivalent position" as such term is defined in Rule 16a-1 of
under the Exchange Act or short sale positions with respect to the
Preferred Stock of the Company. Until the registration statement
referred to in Section 4(c) is declared effective, the Subscriber
hereby agrees not to, and will cause its affiliates not to, enter into
any such "put equivalent position" or short sale position.
The foregoing representations and warranties and undertakings
are made by the Subscriber with the intent that they be relied upon in
determining its suitability as an investor and the Subscriber hereby agrees that
such representations and warranties shall survive its purchase of the Shares.
6. Representations and Warranties of the Company. The Company hereby represents
and warrants to the Subscriber as follows:
(a) The Company is duly incorporated, validly existing and in good standing
under the laws of its state of incorporation, and is duly qualified to do
business as a foreign corporation in all jurisdictions in which the failure to
be so qualified would materially and adversely affect the business or financial
condition, properties or operations of the Company. The Company has all
requisite corporate power and authority (i) to own and lease the properties and
assets it currently owns and leases (if any) and it contemplates owning and
leasing and (ii) to conduct its activities as such activities (if any) are
currently conducted and as currently contemplated to be conducted.
(b) The authorized capital of the Company immediately prior to the Closing will
consist of: (i) 5,000,000 shares of Preferred Stock, of which 1,000 shares are
designated as Series A Preferred Stock, none of which are issued and
outstanding, and of which 20,000 shares are designated as Series B Preferred
Stock, none of which are issued and outstanding, and (ii) 100,000,000 shares of
Common Stock, 40,288,800 of which were issued and outstanding as of January 24,
2003.
(c) The Company has duly authorized the issuance and sale of the Shares in
accordance with the terms of this Agreement (as described herein) by all
requisite corporate action, including the authorization of the Company's Board
of Directors of the issuance and sale of the Shares in accordance herewith, the
authorization and reservation of a number of shares of Common Stock sufficient
to convert all Shares sold in the Offering into shares of Common Stock in
accordance with the terms of the Shares (without giving effect to any future
adjustment in the Conversion Price of the Shares) and the execution, delivery
and performance of any other agreements and instruments executed in connection
herewith. This Agreement constitutes a valid and legally binding obligation of
the Company, enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies, and (iii) to the extent the
9
indemnification provisions contained herein may be limited by applicable federal
or state securities laws.
(d) The Shares, when issued and paid for in accordance with this Agreement, and
the Underlying Common Shares, when issued upon conversion of the Shares, will
represent validly authorized, duly issued and fully paid and nonassessable
shares of Preferred Stock or Common Stock of the Company, as the case may be,
and the issuance thereof will not conflict with the certificate of incorporation
or bylaws of the Company and will be in full compliance with. all federal and
state securities laws applicable to such issuance and sale.
(e) The execution and delivery of this Agreement, the fulfillment of the terms
set forth herein and the consummation of the transactions contemplated hereby
will not conflict with, or constitute a breach of or default under, any
agreement, indenture or instrument by which the Company is bound or any law,
administrative rule, regulation or decree of any court or any governmental body
or administrative agency applicable to the Company.
(f) As of the date of this Agreement, the Memorandum does not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(g) The documents incorporated by reference in the Memorandum at the time they
were filed with the SEC, complied in all material respects with the requirements
of the Exchange Act, and, when read together and with the other information in
the Memorandum, do not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(h) Subsequent to the dates as of which information is given in the Memorandum
and the documents incorporated by reference therein, except as described
therein, there has not been any material adverse change with regard to the
assets or properties, results of operations or financial condition of the
Company.
7. Survival; Indemnification. All representations, warranties and covenants
contained in this Agreement and the indemnification contained in this Section 7
shall survive (i) the acceptance of this Agreement by the Company, (ii) changes
in the transactions, documents and instruments described herein which are not
material or which are to the benefit of Subscriber, and (iii) the death or
disability of Subscriber. Subscriber acknowledges the meaning and legal
consequences of the representations, warranties and covenants in Section 5
hereof and that the Company has relied upon such representations, warranties and
covenants in determining Subscriber's qualification and suitability to purchase
the Shares. Subscriber hereby agrees to indemnify, defend and hold harmless the
Company, its officers, directors, employees, agents and controlling persons,
from and against any and all losses, claims, damages, liabilities, expenses
(including attorneys' fees and disbursements), judgments or amounts paid in
settlement of actions arising out of or resulting from the untruth of any
representation of Subscriber herein or the breach of any warranty or covenant
herein by Subscriber. Notwithstanding the foregoing, however, no representation,
warranty, covenant or acknowledgment made herein by Subscriber shall in any
10
manner be deemed to constitute a waiver of any rights granted to it under the
Securities Act or state securities laws.
8. Notices. All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given if delivered personally or
sent by registered or certified mail, return receipt requested, postage prepaid:
(a) if to the Company, to the following address:
Gasco Energy, Inc.
00 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxx X, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxx Herald
Telephone: (000) 000-0000
(b) if to Subscriber, to the address set forth on the signature page hereto.
(c) or at such other address as any party shall have specified by notice in
writing to the others.
9. Notification of Changes. Subscriber agrees and covenants to notify the
Company immediately upon the occurrence of any event prior to the consummation
of this Offering that would cause any representation, warranty, covenant or
other statement contained in this Agreement to be false or incorrect or of any
change in any statement made herein occurring prior to the consummation of this
Offering.
10. Assignability. This Agreement is not assignable by the Subscriber, and may
not be modified, waived or terminated except by an instrument in writing signed
by the party against whom enforcement of such modification, waiver or
termination is sought.
11. Binding Effect. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the parties and their heirs, executors,
administrators, successors, legal representatives and assigns, and the
agreements, representations, warranties and acknowledgments contained herein
shall be deemed to be made by and be binding upon such heirs, executors,
administrators, successors, legal representatives and assigns.
12. Obligations Irrevocable. The obligations of the Subscriber shall be
irrevocable, except with the consent of the Company, until the consummation or
termination of the Offering.
13. Entire Agreement. This Agreement constitutes the entire agreement of the
Subscriber and the Company relating to the matters contained herein, superseding
all prior contracts or agreements, whether oral or written.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado, without regard to the
principles of conflicts of law thereof that would require the application of the
laws of any jurisdiction other than Colorado.
11
15. Severability. If any provision of this Agreement or the application thereof
to Subscriber or any circumstance shall be held invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provision to
other subscriptions or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
16. Headings. The headings in this Agreement are inserted for convenience and
identification only and are not intended to describe, interpret, define, or
limit the scope, extent or intent of this Agreement or any provision hereof.
17. Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which together shall be deemed to be one and the same agreement.
18. Counsel. Subscriber hereby acknowledges that the Company and its counsel,
Xxxxxx & Xxxxxx L.L.P., represent the interests of the Company and not those of
the Subscriber in any agreement (including this Agreement) to which the Company
is a party.
[Signature Page to follow]
12
IN WITNESS WHEREOF, Subscriber has executed this Subscription and
Registration Rights Agreement as of ___________________, 2003.
SUBSCRIBER
Number of Shares: ____________________
Offering Price per Share: $__________________________
Subscription Amount: $______________________________
By: ________________________________________________
Name:________________________________________________
Title:_______________________________________________
Address: ___________________________________________
The Company hereby accepts the foregoing subscription subject to the terms
and conditions hereof as of ______________, 2003.
Gasco Energy, Inc.
a Nevada corporation
By:__________________________________
Xxxx X. Xxxxxxx, President and
Chief Executive Officer
13
Exhibit A
HOW TO SUBSCRIBE
(1) If you are subscribing for the purchase of Shares, please date and
sign the signature page to this Subscription and Registration Rights Agreement
in the applicable spaces. Please signify the amount of Shares you are purchasing
by inserting such amount in the space provided for on the signature page to the
Agreement.
(2) Complete and sign the accompanying Accredited Investor Certificate.
(3) Send all completed documents to:
Gasco Energy, Inc.
00 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxx X, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxx Herald
Telephone: (000) 000-0000
(4) Transmit funds in an amount equal to the number of shares you are
purchasing multiplied by the Offering Price via wire to the following account:
Domestic
Usbank
000 0xx Xxx. Xxxxx
Xxxxxxxxxxx, XX 00000-0000
ABA 000-000-000
Xxxxx Xxxxxxx Inc.
Acct # 1731-0311-4547
For Further Credit To: Gasco Energy Offering Proceeds
3595-9612
Foreign
Us Bank MNPLS
Swift XXXXXX000XX
Acct # 1731-0311-4547 Xxxxx Xxxxxxx
For Further Credit To: Gasco Energy Offering Proceeds
3595-9612
ATTENTION SUBSCRIBERS: NO SUBSCRIPTION WILL BE ACCEPTED UNLESS ALL DOCUMENTATION
PRESCRIBED HEREIN IS FULLY COMPLETED AND EXECUTED. ANY MATERIALS RECEIVED THAT
ARE INCOMPLETE IN ANY RESPECT WILL BE RETURNED BY THE COMPANY.
14
Exhibit B
CERTIFICATE OF ACCREDITED INVESTOR STATUS
Except as may be indicated by the undersigned below, the undersigned is
an individual "accredited investor," as that term is defined in Regulation D
under the Securities Act of 1933, as amended (the "Securities Act"). The
undersigned has checked the box below indicating the basis on which he is
representing his status as an "accredited investor":
? a bank as defined in Section 3(a)(2) of the Securities Act, or any savings
and loan association or other institution as defined in Section 3(a)(5)(A)
of the Securities Act whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended (the "Securities Exchange
Act"); an insurance company as defined in Section 2(13) of the Securities
Act; an investment company registered under the Investment Company Act of
1940 or a business development company as defined in Section 2(a)(48) of
that Act; a small business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; a plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, and such plan has
total assets in excess of $5,000,000; an employee benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in Section
3(21) of such Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee
benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that
are "accredited investors";
? a private business development company as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940;
? an organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the securities offered,
with total assets in excess of $5,000,000;
? a natural person whose individual net worth, or joint net worth with the
undersigned's spouse, at the time of this purchase exceeds $1,000,000;
? a natural person who had an individual income in excess of $200,000 in each
of the two most recent years or joint income with the undersigned's spouse
in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
? a trust with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is
15
directed by a person who has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of
the prospective investment; or
? an entity in which all of the equity holders are "accredited investors" by
virtue of their meeting one or more of the above standards.
? an individual who is a director or executive officer of Gasco Energy, Inc.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Accredited Investor Status effective as of __________________, 2003.
--------------------------------------------
Name of Subscriber
By: ________________________
Name: ______________________
Title: _______________________
16
Exhibit C
PLAN OF DISTRIBUTION
As of the date of this prospectus, we have not been advised by the
selling stockholders as to any plan of distribution. Distributions of the shares
by the selling stockholders, or by their partners, pledgees, donees (including
charitable organizations), transferees or other successors in interest, may from
time to time be offered for sale either directly by such individual, or through
underwriters, dealers or agents or on any exchange on which the shares may from
time to time be traded, in the over-the-counter market, or in independently
negotiated transactions or otherwise. The methods by which the shares may be
sold include:
- a block trade (which may involve crosses) in which the broker or
dealer so engaged will attempt to sell the securities as agent but may
position and resell a portion of the block as principal to facilitate
the transaction;
- purchases by a broker or dealer as principal and resale by such broker
or dealer for its own account pursuant to this prospectus;
- exchange distributions and/or secondary distributions;
- sales in the over-the-counter market;
- underwritten transactions;
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
- privately negotiated transactions.
Such transactions may be effected by the selling stockholders at market
prices prevailing at the time of sale or at negotiated prices. The selling
stockholders may effect such transactions by selling the Common Stock to
underwriters or to or through broker-dealers, and such underwriters or
broker-dealers may receive compensations in the form of discounts or commissions
from the selling stockholders and may receive commissions from the purchasers of
the Common Stock for whom they may act as agent. The selling stockholders may
agree to indemnify any underwriter, broker-dealer or agent that participates in
transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act. We have agreed to
register the shares for sale under the Securities Act and to indemnify the
selling stockholders and each person who participates as an underwriter in the
offering of the shares against certain civil liabilities, including certain
liabilities under the Securities Act.
In connection with sales of the Common Stock under this prospectus, the
selling stockholders may enter into hedging transactions with broker-dealers,
who may in turn engage in short sales of the Common Stock in the course of
hedging the positions they assume. The selling stockholders also may sell shares
of Common Stock short and deliver them to close our the short positions, or loan
or pledge the shares of Common Stock to broker-dealers that in turn may sell
them.
The selling stockholders and any underwriters, dealers or agents that
participate in distribution of the shares may be deemed to be underwriters, and
any profit on sale of the shares by them and any discounts, commissions or
concessions received by any underwriter, dealer or agent may be deemed to be
underwriting discounts and commissions under the Securities Act.
There can be no assurances that the selling stockholders will sell any
or all of the shares offered under this prospectus.
17
